E-Malt.com News article: USA: Craft Brew Alliance’s net sales grow by 5% in Q3 to September 30

Craft Brew Alliance, Inc. (“CBA”), a leading craft brewing company in the USA, on November 4 reported its financial results for the third quarter ended September 30, 2015.

The company reported net sales of $54.7 million, an increase of $2.6 million or 5.0% over the third quarter of 2014, driven by a 2.2% increase in shipment volume and higher net sales per barrel.

Gross profit for the quarter increased 15.1% to $16.9 million, and gross margin expanded by 270 basis points to 30.8%, primarily as a result of increased pricing, better brewery balance, and lower distribution costs compared to the same period last year.

SG&A expense increased by $1.9 million, primarily due to increased employee-related costs and continued investments in sales infrastructure and marketing.

Across CBA’s portfolio, overall depletion volume was flat compared to the third quarter of 2014, which reflects strong growth in both of CBA’s national brand families, Kona Brewing Co. and Omission, offset by declines in Redhook and Widmer Brothers outside of their home markets, as well as the impact from increasing competition in California.

Kona, now a top 10 national craft beer brand and the lead brand in CBA’s portfolio, and Omission, the #1 selling beer for consumers seeking to avoid gluten, delivered solid depletion growth in the third quarter. Kona grew depletions by 16% over the third quarter of 2014, and Omission delivered 7% depletion growth over the third quarter of 2014.

CBA’s international business continued to grow, with international shipments increasing by 120% over the third quarter of 2014, driven by the continued strength of its Kona brand family.

Net sales and total beer shipments increased 5.0% and 2.2%, respectively, compared to the third quarter of 2014. The net sales increase reflects increased shipment volume and pricing, higher pub sales, and a shift in package mix from draft to bottles and cans, which have a higher selling price per barrel than draft.

CBA’s beer gross margin rate increased 320 basis points to 33.3% in the third quarter, compared to 30.1% in the third quarter last year. This increase was primarily due to pricing, lower distribution costs, and better brewery balance and performance.

Diluted income per share for the third quarter of 2015 increased to $0.04, compared to $0.03 for the same period last year.

“We continued to make steady forward progress in the third quarter, posting strong results despite facing unprecedented competition and market challenges,” said Andy Thomas, chief executive officer, CBA. “Kona’s consistent double digit growth, Widmer Brothers’ and Redhook’s continued solidification in their home markets, and disciplined pricing and selling drove strong increases in net sales. We also started seeing the benefits of our gross margin initiatives, which delivered a 15% increase in gross profit, while continuing to take meaningful steps towards building our future with the addition of our newest strategic partner, Cisco Brewers. Looking ahead, we believe that the work and progress we are making to strengthen our foundation will set us up for long-term growth and success.”

Year to date 2015 financial highlights include:

Net sales were up 1.5% for the nine month period ended September 30, 2015 over the same period in 2014, while total beer shipments decreased by 0.9% compared to the first nine months in 2014, reflecting ongoing efforts to synchronize shipments and depletions and ensure the compay’s wholesalers are carrying optimum levels of inventory.

Kona, Omission and Square Mile grew depletions by 14% over the first nine months in 2014, offset by a decline in Widmer Brothers and Redhook.

In CBA’s home markets of Hawaii, Oregon, and Washington, depletion volume for Kona, Widmer Brothers and Redhook grew 7% over the first nine months of 2014.

CBA’s beer gross margin rate increased by 100 basis points to 32.8% in the first nine months, compared to 31.8% in the first nine months last year, reflecting increased pricing, lower distribution costs per barrel, and better brewery balance.

Owned capacity utilization decreased to 72% in the first nine months of 2015 compared to 77% in the first nine months of 2014, which primarily reflects the addition of the company’s brewing operations in Memphis.

Diluted income per share for the first nine months of 2015 was $0.05, compared to $0.12 for the same period last year.


06 November, 2015